Trends Watch: Volatility and Price Discovery

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Mark Kress, Portfolio Manager, Alpha Wealth Funds’ Alpha Diversified Fund.

What is your outlook for alternative investments?  

My definition of alternatives are investments that generate returns that are uncorrelated with broad market indices in both stocks and bonds.  This represents a wide variety of investment opportunities especially in the hedge fund space.  Volatility and price discovery in equities and bonds have presented many strategies with ample opportunity to deliver returns over the last number of years.  My expectation is for that to continue, and I believe “alternatives” will be the place to be in the years to come.

Where do you see the greatest opportunities and why?

As “alternatives” covers a large swath of options, I look for seasoned teams that stay small and are nimble enough to execute on their boutique strategy -- strategies that take advantage of mispricing stemming from volatility.

Where do you see the greatest challenges and why?

The challenge comes as investors start to lose money in their core asset classes, see the outsized returns in alternatives and crowd out the alpha with too much assets under management (AUM) growth in the strategies that have limited capacity.

What keeps you up at night?

By building a diversified portfolio that has low beta and correlation to the market, where volatility and fundamental price discovery contributes to returns for the underlying managers, I sleep well.  But recent issues with the monetary system and the threat of the U.S. dollar losing purchasing power keeps me up at night. 

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.